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You can find the current article at its original source at https://www.theguardian.com/business/2018/jun/07/ms-cancels-board-bonuses-amid-profits-plunge-and-shake-up
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| M&S cancels board bonuses amid profits plunge and shake-up | M&S cancels board bonuses amid profits plunge and shake-up |
| (6 months later) | |
| The board of Marks & Spencer has blocked annual bonuses for its top executives after the chain’s plunge in annual profits meant shop-floor staff would not qualify for payouts. | The board of Marks & Spencer has blocked annual bonuses for its top executives after the chain’s plunge in annual profits meant shop-floor staff would not qualify for payouts. |
| Vindi Banga, the senior non-executive director who chairs the M&S remuneration committee, said the decision had been taken in the interests of fairness. | Vindi Banga, the senior non-executive director who chairs the M&S remuneration committee, said the decision had been taken in the interests of fairness. |
| “This decision was not taken lightly,” said Banga. “Pre-tax profit was below the threshold required to pay bonuses to colleagues elsewhere in the business, and in the interests of fairness it would not be appropriate to pay a bonus to directors.” | “This decision was not taken lightly,” said Banga. “Pre-tax profit was below the threshold required to pay bonuses to colleagues elsewhere in the business, and in the interests of fairness it would not be appropriate to pay a bonus to directors.” |
| The decision was intended to head off criticism of the retailer’s board members as it embarked on its latest turnaround programme, which will close 100 shops over the next four years. The shake-up is also likely to trigger thousands of job losses. | The decision was intended to head off criticism of the retailer’s board members as it embarked on its latest turnaround programme, which will close 100 shops over the next four years. The shake-up is also likely to trigger thousands of job losses. |
| Marks & Spencer to close 100-plus stores by 2022 in ‘radical’ plan | |
| However, the M&S chief executive, Steve Rowe, will still be handed shares worth £2m next month under the company’s long-term share bonus scheme. He was paid £1.1m this year , according to the retailer’s annual report. The package was made up of a basic salary of £810,000, an additional £203,000 in cash towards a pension and a £76,000 share-award from a previous incentive. In 2017 he got a £600,000 cash bonus and was paid a total of £1.6m. | However, the M&S chief executive, Steve Rowe, will still be handed shares worth £2m next month under the company’s long-term share bonus scheme. He was paid £1.1m this year , according to the retailer’s annual report. The package was made up of a basic salary of £810,000, an additional £203,000 in cash towards a pension and a £76,000 share-award from a previous incentive. In 2017 he got a £600,000 cash bonus and was paid a total of £1.6m. |
| Rowe’s cash bonus is decided according to a formula: 70% is pegged to the company’s financial performance and the remainder tied to hitting other targets. It was in the latter category that the remuneration committee decided to axe payouts. | Rowe’s cash bonus is decided according to a formula: 70% is pegged to the company’s financial performance and the remainder tied to hitting other targets. It was in the latter category that the remuneration committee decided to axe payouts. |
| “The committee decided to exercise its discretion that no payment would be made to any director, irrespective of any achievements against each director’s individual objectives,” said Banga. | “The committee decided to exercise its discretion that no payment would be made to any director, irrespective of any achievements against each director’s individual objectives,” said Banga. |
| This year’s round of shareholder meetings has been rocked by rows over excessive executive pay at various companies, including the housebuilder Persimmon, Ladbrokes’ owner, GVC and the turnaround specialist Melrose. | This year’s round of shareholder meetings has been rocked by rows over excessive executive pay at various companies, including the housebuilder Persimmon, Ladbrokes’ owner, GVC and the turnaround specialist Melrose. |
| At Persimmon, shareholders revolted against the “grossly excessive” £75m bonus handed to the chief executive, Jeff Fairburn, while at Melrose shareholders pushed back against the decision to pay a £42m bonus to each of four directors. | At Persimmon, shareholders revolted against the “grossly excessive” £75m bonus handed to the chief executive, Jeff Fairburn, while at Melrose shareholders pushed back against the decision to pay a £42m bonus to each of four directors. |
| Last month M&S reported a 62% drop in pre-tax profits to £66.8m after it racked up more than £500m restructuring costs. At that update the M&S chairman, Archie Norman, promised that the years of disappointment endured by M&S shoppers and investors were coming to an end, with the management team setting out a clear plan to revive the business. | Last month M&S reported a 62% drop in pre-tax profits to £66.8m after it racked up more than £500m restructuring costs. At that update the M&S chairman, Archie Norman, promised that the years of disappointment endured by M&S shoppers and investors were coming to an end, with the management team setting out a clear plan to revive the business. |
| “We are looking for people to recognise that we are building a very strong management team who are going to give this a bloody good shot,” said Norman, who is best known for reviving the fortunes of Asda and ITV. “I’m convinced this is a turning point in our history.” | “We are looking for people to recognise that we are building a very strong management team who are going to give this a bloody good shot,” said Norman, who is best known for reviving the fortunes of Asda and ITV. “I’m convinced this is a turning point in our history.” |
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